Termination Notice and Unemployment Insurance

When an employee is involuntarily terminated, you must give immediate written notice to the employee of a change in the employment relationship. This notice must be given to an employee who is discharged, laid off, given a leave of absence or whose status changes from employee to independent contractor.1 The law does not require a written notice for employee-initiated terminations or cessation of work due to a labor dispute, although you may choose to provide the notice.

There is not a specific form for the required notice. You can create your own form, send the appropriate information in a letter, or use the sample Notice to Employee as to Change in Relationship.

If you create your own form or letter, you must include the following information:

  • Your company name
  • The name of the person to contact at your company if EDD needs further information
  • The employee’s name
  • The employee’s Social Security number (SSN)
  • Indication that the action was a termination, layoff, leave of absence or a change in status
  • The action date

Once completed, you give a copy of the form to the employee and retain a copy for your records. You can request that the employee sign an acknowledgment of receipt of the termination notice, but you are not required to do so by law.

The employee must be given a copy of the notice no later than the effective date of the termination.

Use the sample Notice to Employee as to Change in Relationship to meet the EDD’s requirements and to protest UI claims by an ineligible employee.

Employers who document a specific reason for termination, such as poor attendance or performance, can use this form to help defend against employee allegations of wrongful or discriminatory termination. The sample notice provides checkboxes for you to choose the reason for the employment status change. The specified reasons correspond with the factors that the EDD considers to determine an applicant’s eligibility for UI benefits. This form is valuable documentation if you must contest a claim for UI benefits. The sample notice lists the following reasons for termination:

  • Voluntary quit — The employee chose to leave their job voluntarily. (UI eligibility: This person would be ineligible for UI compensation unless they can establish compelling personal reasons or can attribute good cause to the employer. An employee can quit a job and be eligible for UI when good cause is a substantial motivating factor in causing the claimant to leave work. The motivating factor may or may not be work connected. It must be real, substantial and compelling. It must be something that would cause a reasonable person to leave work under the same circumstances.)
  • Layoff — Available work ends either temporarily or permanently and through no fault of the employee. (UI eligibility: This claimant would most likely be eligible for UI benefits.)
  • Leave of absence — Usually occurs for reasons of health, pregnancy, discipline or a sabbatical that the employer offers. (UI eligibility: This claimant may be eligible to collect UI benefits.)
  • Termination — The employer has good cause to terminate an employee within the parameters of organization policy or union agreement. (UI eligibility: The employer must establish misconduct to avoid paying UI benefits.)
  • Refusal to accept available work — The employee refused to perform work that is:
    • Appropriate to the individual’s health, safety, morals and physical condition
    • Consistent with the individual’s prior experience and earnings
    • A reasonable distance from the individual’s residence
(UI eligibility: Under these circumstances, a claimant would most likely be ineligible to collect UI benefits.)
  • Change in status — The employee/employer relationship is being terminated, but you can choose to hire this person as an independent contractor. For more information on determining independent contractor status, see Independent Contractor.

Give the completed termination notice to the employee. Although not required by law, request the employee’s signature acknowledging that they received the termination notice. You are not required to submit a copy of the Notice to Employee as to Change in Relationship to EDD. Retain a copy in the employee’s personnel file.


1. UI Code sec. 1089; 22 CCR sec. 1089-1